Is Ruth’s Hospitality Group, Inc. (NASDAQ:RUTH) a good bet right now? We like to analyze hedge fund sentiment before doing days of in-depth research. We do so because hedge funds and other elite investors have numerous Ivy league graduates, expert network advisers, and supply chain tipsters working or consulting for them. There is not a shortage of news stories covering failed hedge fund investments (for some reason media paid a ton of attention to Ackman’s gigantic JC Penney and Valeant failures) and it is a fact that hedge funds’ picks don’t beat the market 100% of the time, but their consensus picks have historically done very well and have outperformed the market after adjusting for risk.
Ruth’s Hospitality Group, Inc. (NASDAQ:RUTH) investors should pay attention to an increase in support from the world’s most elite money managers recently. RUTH was in 17 hedge funds’ portfolios at the end of the third quarter of 2015. There were 12 hedge funds in our database with RUTH holdings at the end of the previous quarter. At the end of this article we will also compare RUTH to other stocks including John B. Sanfilippo & Son, Inc. (NASDAQ:JBSS), Glu Mobile Inc. (NASDAQ:GLUU), and Motorcar Parts of America, Inc. (NASDAQ:MPAA) to get a better sense of its popularity.
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Now, let’s analyze the recent action surrounding Ruth’s Hospitality Group, Inc. (NASDAQ:RUTH).
How are hedge funds trading Ruth’s Hospitality Group, Inc. (NASDAQ:RUTH)?
Heading into Q4, a total of 17 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 42% from the previous quarter. With hedge funds’ sentiment swirling, there exists an “upper tier” of key hedge fund managers who were boosting their holdings substantially (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Michael Price’s MFP Investors has the largest position in Ruth’s Hospitality Group, Inc. (NASDAQ:RUTH), worth close to $9.2 million, amounting to 1.4% of its total 13F portfolio. Sitting at the No. 2 spot is AQR Capital Management, led by Cliff Asness, holding a $5.6 million position; less than 0.1% of its 13F portfolio is allocated to the stock. Some other members of the smart money with similar optimism comprise Robert B. Gillam’s McKinley Capital Management, Jim Simons’s Renaissance Technologies and John Overdeck and David Siegel’s Two Sigma Advisors.
As industrywide interest jumped, key hedge funds were leading the bulls’ herd. McKinley Capital Management, managed by Robert B. Gillam, initiated the most outsized position in Ruth’s Hospitality Group, Inc. (NASDAQ:RUTH). McKinley Capital Management had $5 million invested in the company at the end of the quarter. Israel Englander’s Millennium Management also initiated a $0.9 million position during the quarter. The other funds with brand new RUTH positions are Ken Gray and Steve Walsh’s Bryn Mawr Capital, Matthew Tewksbury’s Stevens Capital Management, and Michael Platt and William Reeves’s BlueCrest Capital Mgmt..
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Ruth’s Hospitality Group, Inc. (NASDAQ:RUTH) but similarly valued. These stocks are John B. Sanfilippo & Son, Inc. (NASDAQ:JBSS), Glu Mobile Inc. (NASDAQ:GLUU), Motorcar Parts of America, Inc. (NASDAQ:MPAA), and Gibraltar Industries Inc (NASDAQ:ROCK). All of these stocks’ market caps are closest to RUTH’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| JBSS | 10 | 43856 | 0 |
| GLUU | 21 | 106279 | -3 |
| MPAA | 16 | 108608 | -1 |
| ROCK | 20 | 131483 | 7 |
As you can see these stocks had an average of 16.75 hedge funds with bullish positions and the average amount invested in these stocks was $98 million. That figure was $30 million in RUTH’s case. Glu Mobile Inc. (NASDAQ:GLUU) is the most popular stock in this table. On the other hand John B. Sanfilippo & Son, Inc. (NASDAQ:JBSS) is the least popular one with only 10 bullish hedge fund positions. Ruth’s Hospitality Group, Inc. (NASDAQ:RUTH) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard GLUU might be a better candidate to consider a long position.
